Irreverent Economics

The EU is not gonna get its way on hedge funds, as I discussed last week. The UK came to its senses, and killed off the anti hedge fund agenda − part of the anti financial industry agenda of the Europeans, if not anci capitalism, especially France and Germany.

But why do those countries dislike hedge funds so much? General dislike of anglo-saxon capitalism? Because they favors those bold, and intelligent and independent, not the qualities European politicians posses or like?

Or is it more self preservation. If bare knuckle capitalism finds favor in Europe, maybe there will be less patronage for the politicians. Less power.

At they lost this round. But they will come back.

Now the EU is yet again worried about hedge funds. In the words of the rotating presidency, Spain

“appropriate co-operation arrangements for the purpose of systemic risk oversight and in line with international standards… in place between the competent authorities of the member state where the fund is marketed and the competent authorities of the AIFM”

This is of course non EU hedge funds they are talking about. The EU does not like the locusts, hedge funds, but even less, clearly, when they are non European.

Considering that hedge funds had nothing to do with the crisis, and apparently do not really constitute to systemic risk in the sense the highly regulated banks do, what gives?

Protectionism? Dislike of free capital flows? Exploiting the crisis to get their agenda approved? Or all three.

Besides, how are they gonna go about this? One can’t really regulate hedge funds.